The crisis in the German housing market will last until 2026.

The Housing Market Crisis Continues in Germany

The research organization Empirica has published its "2026 Housing Market Report," warning that rent increases will continue across Germany until 2026. According to the report, a 0.5% increase in the sale prices of existing homes is expected, suggesting a stable trend.

Ongoing Rental Price Increase Trend

Rental prices are expected to rise by an average of 4.4% in 2025, while this rate is projected to continue between 3% and 4% in 2026. It is noted that in major metropolises like Berlin, Hamburg, and Munich, prices have reached saturation points, and thus, the pace of increases is shifting outside the city.

Decrease in New Housing Production

Another striking point in the report is the sharp decline in new housing production. Only 190,000 homes were completed across Germany in 2025, with this number expected to drop further in 2026. The federal government's annual target of 400,000 new homes will be largely unmet, with plans for only 178,000 homes to be completed. This will be the lowest level since 2012.

Square Meter Costs and Rents

Harald Simons, a board member of Empirica, predicts that the square meter costs of new construction projects will increase by an average of 10%, along with regional differences. It is noted that current rents follow the development of new housing rents with a certain delay.

In metropolises, rents at the 20 euro level are expected to rise to an average of 15-16 euros. In medium-sized cities, this figure could rise to 13-14 euros, which will increase the financial burden on tenants.

Housing Prices are Increasing Steadily

According to data from the German Mortgage Banks Association (VDP), the annual increase rate in housing prices will be 1.8% in 2024, whereas this rate reached 4% last year. Jens Tolckmitt, the VDP General Manager, stated that price increases will continue due to the current housing shortage, and mortgage interest rates will likely remain stable at around 3.6%.

The increasing burden of interest rates and stagnation in disposable household income are making the process of becoming a homeowner more difficult and negatively affecting demand.